Metro Group CEO Dr Eckhard Cordes said that the company’s full-year EBIT target of 10% growth is still achievable, despite economic uncertainty.
In a conference call to investors yesterday (3 November), Cordes recognised consumers are more reluctant to spend during a volatile trading environment but remains optimistic about the upcoming quarter.
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“The world has changed since the summer”, Cordes said. “We are seeing an unprecedented sovereign debt crisis, which has led to much greater uncertainty. Many of our customers are more anxious and cash-strapped than before and consequently consumer confidence is eroding.
“However, this does not mean we cannot get 10% EBIT growth. If we see good Christmas trading, around 10% EBIT growth is still achievable.”
He recognised that last year Metro had a “poor” Christmas period, which also suffered from having no e-commerce business available, but remains confident that this year sales will be up, citing a report on consumer sentiment in Germany, which predicts a “positive” festive period. He added that Metro expects at least 5% growth even if Christmas sales aren’t as good as forecasted.
Cordes’ statements come at a tumultuous period, as he has been subject to intense scrutiny with regards to his position in the company.
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By GlobalDataOver recent months, he has been on a rollercoaster ride as support for him has waxed and waned.
In early September the company’s shareholders said they would not support the extension of his current CEO contract, then they announced he had their backing, before finally issuing a vote of no confidence. Yesterday he announced that he will not seek an extension to his contract, which ends next October.
He said: “It might come as a surprise to some of you but I am still here.”
“Metro Group is currently by no means unmanaged. We are as enthusiastic and concentrated as ever to continue shaping and driving Metro on the course we have set.”
With no concrete departure date, he added: “I will be here for as long as the company needs me.”
Metro CEO Olaf Koch’s contract has been renewed for another three years.
Cordes also said the main highlight of the third-quarter was the 37.9% increase in EBIT. In Germany, the company disposed of its unprofitable Real and Metro Cash & Carry stores.
For the first nine months of the year, Metro Cash & Carry sales were up 0.4% to reach EUR22.6bn. In Germany and Europe sales were down but in Eastern Europe sales were up 1.4% and in Asia and Africa, up 8.7%.
Real sales for the period were down 1.7% to EUR8.1bn, with sales drooping in both Germany and Eastern Europe.
However, he emphasised that in Russia there seems to be no signs of a slowdown.
In addition, the retail giant confirmed that it is in talks with parties about selling its department store business Galeria Kaufhof. Cordes did not disclose any financial details of a possible disposable.
“What I can say though is Kaufhof is an attractive asset,” Cordes said.
An analyst note from Bernstein Research said that the retailer is still a worthwhile investment target.
“We remain convinced that Metro is a fundamentally attractive business and believe the third-quarter results and encouraging statements about full-year profitability should help turn investor sentiment on the stock,” it said.
